Brussels, 11/07/2012 (Agence Europe) - On Wednesday 11 July 2012, the European Commission welcomed the new austerity measures announced by Spain, including an increase in VAT and reform of the civil service, as an important step to meeting the 2012 budget targets.
At a press conference, Simon O'Connor, a spokesman for Economic and Monetary Affairs Commissioner Olli Rehn, welcomed the new austerity measures. O'Connor said that the Spanish prime minister, Mariano Rajoy, said his government would be following the Commission's macroeconomic recommendations formally introduced by the ECOFIN Council on Tuesday, which the Commission welcomed, along with the government's determination and the fact it made the announcement the day after the ECOFIN Council.
On Tuesday, the EU gave Spain an extra year (until 2014) to bring its deficit back below 3% of GDP because of the worsening economic outlook (see EUROPE 10642), in return for submitting a structural adjustment plan for 2013 and 2014 before the end of the month with a view to cutting the public deficit to 6.3% in 2012, 4.5% in 2013 and 2.8% in 2014. On Wednesday, Rajoy announced new austerity measures to claw back €65 bn before the end of 2014, including an increase in VAT and reform of the civil service. (LC/transl.fl)